April Employer Alert: More Changes to Ontario’s Employment Laws

More Changes to Ontario’s Employment Laws: From Establishing Job Salary Disclosure Obligations to Vacation Pay Requirements

On March 21, 2024, the Ontario Government’s most recent employment law changes received royal assent. These most recent changes come about by way of Bill 149, Working For Workers Four Act, 2024. In case you could not tell by the name, this is the fourth Working For Workers Act bringing about employment legislative amendments. The first three Acts were introduced in 2021, 2022, and 2023. The previous Acts brought about multiple changes to employment laws, including prohibiting non-competition agreements, introducing a requirement to have a workplace electronic monitoring policy, and introducing a temporary help agency and recruiter licencing regime. This emailer will review the most significant amendments brought about by the latest Working For Workers Act.

New Job Posting Obligations

Public job postings play an important role in attracting new talent. Pursuant to the latest Working for Workers Act, there will be four new requirements for public job postings, to come into effect on a date to be named. These new forthcoming requirements are:

  1. Disclose the Salary Range: Public job postings will soon be required to disclose the salary/wage range for the advertised position. Pursuant to the amendments, the government can introduce regulation that will create exceptions for this requirement and provide further details about this requirement.
  2. Disclose Any Use of AI. Employers will soon be required to reveal in job postings if they use AI during the hiring process. This would include using AI to screen applications, using AI to assess interview answers, etc.
  3. Do Not Require Canadian Work Experience. Employers will soon be prohibited from requiring Canadian work experience from its potential applicants. As such, no public job posting should include a reference to preferring candidates with Canadian work experience. Of course, employers will remain able to consider Canadian work experience, subject to the Human Right Code.
  4. Keep a Copy of the Job Posting. Employers will soon be required to keep a copy of all public job postings for at least three years. While the planned legislative retention period is only three years, employers may wish to keep a record of job postings for longer. The record of a job posting can play an important role in employment litigation, including confirming the parties understanding of the role’s duties and responsibilities.

New Vacation Pay Requirement

Generally, employees are entitled to vacation pay based on a percentage of earned wages and vacation days. For example, an employee with 5 years of service is normally entitled to 6% vacation pay per year and 3 weeks of vacation days. Employers normally address the accruing vacation pay by either paying it out when the employee takes their vacation or by paying it out with each paycheque. The practice of paying out vacation pay with each paycheque is more common where the employee’s pay fluctuates significantly from paycheque to paycheque (e.g. part-time hourly wage employees).

Pursuant to the latest Working for Workers Act, as of June 21, 2024, employers will only be able to pay out accrued vacation pay with each paycheque if they have the employees’ written consent. Otherwise, the employer will have to pay out the accrued vacation pay when the employee takes their vacation or when it becomes immediately due (e.g. when the employee quits).

As a result of this forthcoming amendment, employers should ensure that their employment agreements and their employee handbooks all confirm the agreed upon practice for paying out vacation pay. The vacation provision of the employee handbook should also further define and limit your obligations as an employer. For example, it should confirm that vacation pay is based on wages, so that when an employee takes an unpaid leave, they do not still accumulate vacation pay. Further, it should confirm when earned and unpaid vacation pay will be paid out at the latest. This will potentially limit how far back an employee can sue for alleged earned and unpaid vacation pay. A smartly drafted vacation provision in the employee handbook can go a long way to protect employers.

Workers Hired on Trial Basis are still Employees with Statutory Entitlements

Some employers have had a practice of trying out workers on an unpaid trial basis. Once the worker successfully completes the trial period, they are then hired as an employee. The Ministry of Labour has repeatedly challenged this practice. Further to the Ministry of Labour’s position, the latest Working for Workers Act has now amended the Employment Standards Act to confirm that a trial period worker is an employee. As such, statutory employee entitlements, such as minimum wage, will apply even when a worker is hired only on a trial basis.

New Requirements For Paying Tips and Pooling Tips

For many businesses, clients and customers show their gratitude with tips. These tips can become an important part of an employee’s overall compensation package. The latest Working for Workers Act has brought about two new obligations in regards to employee tips. These new obligations will come into effect on June 21, 2024. First, tips will need to be paid by cash or cheque (delivered at the workplace or a mutually agreed to location). To pay tips by way of direct deposit, the employer will need to have the employee’s consent. Second, if the workplace pools tips, then the employer will need to post a written tip sharing policy in an area that can be seen by the employees. 

For strategic advice on addressing the above, including drafting job postings, drafting a tip pool policy, or addressing vacations obligations, please contact our firm.